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August 1999

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LATEST ARTICLES

  • As bankers pack off for the August break to their summer playgrounds, their Caribbean beach-side or Tuscan villas, or to their yachts, many will reflect uneasily on a tumultuous 12 months in global financial markets. This time a year ago, few could have guessed what a tornado was about to engulf them. News of the political and economic crisis in Russia filtered across the sunblock-scented airwaves in August. Within weeks, a huge speculative bubble in emerging-market debt that had built up in the first half of 1998 suddenly burst. Investors, traders and banks scrambled for margin and liquidity, spreads on all but the safest government bonds blew out as financial markets deleveraged, stocks tumbled and the dollar had its biggest ever one-day fall against the yen. The Federal Reserve found itself brokering the bail-out of an obscure hedge fund, which, had it collapsed, might have plunged the markets into catastrophe.
  • It's been party time in Lebanon. At the Baalbek music festival, Vanessa Mae, the violinist renowned at least as much for her sexy image as for her playing, wowed 4,000 at the Temple of Jupiter. At the Beiteddine palace, Tito Puente and Celia Cruz brought salsa and mambo to the Chouf. And in Tyre, Iraqi-born Kazem al-Saher drew the biggest crowd of all, packing 5,000 people into the Hippodrome on a sultry Friday evening.
  • Internet killed the Wall Street star
  • Stockmarkets may be recovering but emerging market banks are still in crisis. The long struggle to restore capital adequacy will carry on for some time. When analyzing the top 200 emerging market banks, prepared by Fitch IBCA, it's important to remember this, writes Brian Caplen.
  • by David Roche
  • So you think the euro is having a rough ride? What you've seen is a deliberate devaluation strategy from the political hard core. But, because of the structural flaws in euroland the present regime won't cure the euro's inherent weakness. Expect to see the European Central Bank tending one sick patient after another, predicts Bernard Connolly.
  • From cement makers to oil companies, from first-time issuers to regular borrowers, corporates big and small are targeting European investors with bond issues. How have they fared?
  • Asset Management: A derivatives approach to index tracking
  • Leading supervisors on the Basel Committee on Banking Supervision are giving their 1988 rules a much-needed overhaul, trying to bring capital charges closer to the banks' own view of risk and return. But who's to say the banks are right? These proposals will be fought over tooth and nail by the lowly rated, the cautious, those suspicious of too much, too hasty sophistication, and those who mistrust rating agencies. Meanwhile, turf battles continue over lax banking structures in the US and protectionist banking structures in Germany. David Shirreff reports.
  • Bulgaria: Has the IMF got it right in Sofia?
  • Another one bites the dust
  • Another one bites the dust
  • Bulgaria: Has the IMF got it right in Sofia?
  • Another one bites the dust
  • European Stock Exchanges: New markets for old
  • Bulgaria: Has the IMF got it right in Sofia?
  • Another one bites the dust
  • India: Essar's woes mark end of easy credit
  • Euroland finally seems to be accelerating. Price stability has been achieved and few question its sustainability. The bond market is a clear success for the euro and a broad range of borrowers have emerged. We should not view these developments as a flash in the pan. The European Commission has come up with a plan, Graham Bishop considers its implications.
  • Don't fall prey to confusing a successful currency with a strong one, says Avinash Persaud. The euro fits the description of a credible currency. The euro corporate bond market is thriving and the euro is quickly gaining a vehicle currency and international role. Non-government markets are being revitalized, let's not underestimate the power of change.
  • Another one bites the dust
  • The Pfandbrief market is now the single biggest bond market in Europe. The jumbo market, which accounts for 25% of Pfandbrief issuance, grew by 80% in 1998 and is now bigger than several European government bond markets. We asked eight key players where this market is going.
  • Alex Seippel, Founder, the Roundstone Group
  • Some swap counterparties of defunct Hong Kong investment bank Peregrine are claiming a double discount on what they owe its liquidators. Ridiculous? Perhaps, but uncertain enough for an appeal to a UK court. The implications, for swap documentation and close-out netting with poor-credit counterparties, could be huge. By David Shirreff.
  • With more banks keen to explore internet banking, the legal and regulatory problems remain immense. But there are ways to minimize their impact. By Christopher Stoakes
  • Tentatively at first, then in a growing rush of enthusiasm, the first corporate bonds in the new single currency began to appear in January. Before long, scores of companies were clamouring to reach this broad, new investor base. Then came confusion in pricing and growing investor disenchantment. But the restructuring of Europe should mean that the continent's corporate bond market is here to stay. And as investors learn to tell the good deals from the bad, it is beginning to acquire depth and maturity. Rebecca Bream reports
  • Ruggero Magnoni, Vice-chairman, Lehman Brothers (Europe)
  • Deutsche Telekom's €11 billion share issue in late June was like the company itself: too big to ignore and surrounded by controversy. Retail investors in Germany, Italy and even Japan rushed to buy the deal. But institutional investors took a dimmer view. Alex Mathias reports.
  • Few other areas of international finance have been as disaster-strewn in recent years as equity derivatives. A succession of investment banks, including UBS, NatWest, and Bankers Trust, have been spectacularly blown up. And last year there were widespread losses after a European retail boom in guaranteed products left dealers short of volatility. But still newcomers are queuing to join the market. Marcus Walker asks the elite players how they adapt and survive.
  • In the first of a series of articles examining the businesses of foreign banks in the US, Antony Currie looks at UK bank NatWest's investment banking and treasury operations. He starts with a day trip to Greenwich Capital, the fixed-income boutique bought in 1996 that has survived NatWest's investment-banking retrenchment and is now leading from the top. He then returns to New York, to a stellar performance from the treasury group, Global Financial Markets.